2 Business Practices
1. Which sectors are most likely to be affected by Brexit? And will the impact on the service sector be different from that on manufacturers?
Businesses that trade heavily in goods or services with the EU, that are heavily regulated, or that employ substantial numbers of staff from the EU are likely to feel the most significant impact from Brexit.
These are thought to include agriculture, financial services, food and drink, automotive and chemical engineering - however any impact will depend on an organisation’s own circumstances.
Uncertainties around Brexit have also been a factor in the currently de-valued pound. This could make UK product and services more competitive abroad, and offer potential opportunities for international trade.
You can find a copy of the ‘declaration on the future relationship’ between the EU and the UK here: https://www.gov.uk/government/publications/progress-on-the-uks-exit-from-and-future-relationship-with-the-european-union
Understand tariffs and how they work
2. What is the government doing to help businesses prepare for Brexit?
While the Government is hopeful the draft Withdrawal Agreement published in November 2018 will be agreed, it has published guidance for businesses on how to prepare for Brexit in the event of a no-deal scenario.
In August 2018, it began releasing a series of technical notices that set out detailed advice on a wide range of topics aimed at different industries and sectors. They’re designed to help businesses make informed decisions ahead of 29 March 2019, when the UK is scheduled to leave the EU.
The documents cover areas such as farming, fishing, seafaring and medicines, and provide important information on changes to business regulations if there’s no deal. More broadly, they include implications for companies that import and export and what will happen if the free circulation of goods between the UK and EU ends.
See technical notices at GOV.UK
3. What are technical notices and how can they help my business prepare for Brexit?
Technical notices are Brexit-related documents published by the UK Government. They set out, in considerable detail, how leaving the UK without a deal would impact different issues and business sectors.
The documents cover everything from farming and fishing to satellites and space and should be of use to businesses in planning for no-deal scenarios. From importing to exporting and meeting regulations, there is advice and guidance if there is no Brexit deal.
See technical notices at GOV.UK
4. What is a UK Economic Operator Registration and Identification number and will I have to register for one?
An Economic Operator Registration and Identification, or EORI, number is a unique ID code required by businesses that trade goods with countries outside the EU.
In the UK, an EORI number is allocated to an importer and exporter by HMRC. It provides information to customs authorities as part of EU security measures on shipments.
Under a no-deal Brexit, UK businesses shipping goods to or from the EU would need to follow the same customs procedures as currently apply when trading with a country outside the EU. That means you would need to register for an EORI number.
You can apply online at https://www.gov.uk/eori
5. How will employment rules change for UK-based EU citizens after Brexit?
Around 3.6 million non-UK EU nationals live in the UK. Theresa May has pledged that no EU citizen currently residing in the UK will have to leave, even if freedom of movement ends following Brexit.
EU nationals already working in the UK will be able to apply for ‘settled status’ to remain indefinitely if they’ve been here for five years or will have been by 31 December 2020 when the proposed Brexit transitional period ends.
Those who have been in the UK for less than five years by the end of 2020 can apply for pre-settled status, and qualify for full settled status once they’ve lived in the UK for five years.
These rights will also apply in the event of a no deal exit, as the Government intends to pass the Citizens’ Rights section of the draft Withdrawal Agreement into UK law, even if the deal fails.
For anyone who arrives after 31 December 2020, there will be a new immigration system in place.
After Brexit, the Migration Advisory Committee has recommended that the UK’s current points-based system for immigration should be extended to EU migrants, to give more skilled workers more permits.
If you currently employ EU workers, you should consider how the new migration rules are likely to affect your business.
For more information see: https://www.gov.uk/settled-status-eu-citizens-families
6. Is it too late to start planning for Brexit now? And where should I start?
Planning for Brexit may seem like an impossible task when there is so much uncertainty. However, it is important to consider how different scenarios will affect your business, and what contingency plans you can put in place to deal with these now.
The first step is to consider how exposed you are to any risks associated with Brexit. Look at the possible impact on your supply chain, customers and customer demand, stakeholders and workforce. At the same time, explore any opportunities Brexit presents, including to further trade with countries outside of the EU.
The British Chamber of Commerce has put together a Business Brexit checklist highlighting key areas to consider, including future staffing requirements and any potential delays at borders. This can help you put in place measures to mitigate the risks, ensuring you have the skills needed, the correct customs documentation and provisions to cope with currency volatility.
The Government’s technical notices also offer detailed information on what would happen in different industries and sectors in the event of a no-deal situation.
7. Who do I need on a business task force to plan for Brexit?
In the same way you would plan for a major incident or takeover, you should consider establishing a core team to manage your Brexit strategy.
According to the CBI, 82% of large businesses – and a third of firms overall – have set up an internal Brexit task force or steering group to project-manage preparations.
To be most effective, your task force should be made up of representatives from key functions across your business, not just senior management. This includes people who deal with the supply chain, procurement, marketing, sales, governance, HR and financial planning.
Smaller companies that don’t have as many resources may wish to bring on board experts from legal firms and business associations to help them gain a greater understanding of what Brexit means for them.
8. Should I plan for both Brexit under the draft Withdrawal Agreement, and for a no-deal scenario?
While a draft Withdrawal Agreement has been published, it remains to be seen if this can be finally agreed by both parties. The deal may be altered further before it is ratified, it may be replaced by an alternative deal, or agreement may fall down completely and the UK may leave the EU with no deal in place in March 2019.
This presents a range of different scenarios to plan for.
You can access an ‘explainer’ that details the main points of the draft Withdrawal Agreement to help you plan for its implementation. The British Chamber of Commerce also has a Business Brexit checklist advising on areas to consider. The Government’s Technical Notices and the European Commission’s Preparedness Notices give information on what will happen in a no-deal scenario.
See Technical Notices on GOV.UK
See the European Commission’s Preparedness Notices
See the Explainer for the agreement on the withdrawal of the UK from the EU
9. What are the HR and employee issues I need to plan and prepare for?
It’s unlikely that there will be immediate changes to employment law as a result of Brexit. Much of the regulation is enshrined in domestic law, and powers from EU Directives have been brought under UK law in the EU Withdrawal Act.
However, businesses that employ EU nationals will need to understand the implications of Brexit for workers.
Brexit won’t have an immediate effect on EU citizens’ rights to live and work in the UK. Their rights to healthcare, pensions and other benefits are protected in the Withdrawal Agreement. And Freedom of Movement will continue up to December 2020 during the Transition Period. The Government has also indicated that the section of the draft Withdrawal Agreement concerning citizens’ rights would be passed into UK law if there is a no-deal exit.
Workers who are resident in the UK at that time will be able to apply for ‘settled status’ after five years under the EU Settlement Scheme. The Government has produced a toolkit that employers can use to communicate the scheme to employees.
See the EU Settlement Scheme Employer Toolkit on GOV.UK
10. My business is with the public sector. What impact is Brexit likely to have on my market?
Public procurement rules will stay the same immediately after Brexit under the draft Withdrawal Agreement published in November 2018, but after the proposed Transition Period ends these may change as the UK introduces its own ‘common frameworks’.
It’s possible then that the market will be opened up to other countries, which may affect businesses in this country, but in that circumstance UK businesses too may have opportunities to bid for public contacts further afield.
In the event of a no-deal Brexit, the Government plans to bring forward legislation to implement the UK-wide common frameworks with greater urgency.
According to Deloitte, public sector bodies are likely to be affected by any tariffs on goods in the same way as private sector bodies. Another impact they are likely to feel is in staffing – there has already been a steep decline in EU applications for nursing positions, for example. These potential issues may have knock-on effects for companies that do business with the public sector.